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LEVICK Weekly - Jan 4 2013

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In this Issue: …

In this Issue:

Global Regulatory Cooperation with Jonathan Armstrong
Infographics are the New Soundbites: A Look at Hydraulic Fracturing
The Newtown Tragedy & Camera-Chasing at its Worst
Why Netflix Shouldn't Back Down
The SEC Gets its Groove Back
Blogs Worth Following
LEVICK in the News

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  • 1. EDITION 22Weekly January 4, 2013The Newtown Tragedy& Camera-Chasing at its Worst with Stefanie Fogel Ron Frank / Shutterstock.com
  • 2. 03 Contents 04 Global Regulatory Cooperation with Jonathan Armstrong 06 Infographics Are the New Soundbites: A Look at Hydraulic Fracturing 10 The Newtown Tragedy & Camera-Chasing at its Worst In case you missed these stories during the holidays… 12 Why Netflix Shouldn’t Back Down 16 The SEC Gets Its Groove Back 21 Blogs Worth Following 22 LEVICK in the News Ron Frank / Shutterstock.comCOVER Image: On December 14, 2012, Adam Lanza, age 20, fatally shot twenty children and six adult staff members andwounded two at Sandy Hook Elementary School in the village of Sandy Hook in the town of Newtown, Connecticut. Beforedriving to the school, Lanza had shot and killed his mother, Nancy Lanza, at their Newtown home. After killing students andstaff members, Lanza committed suicide by shooting himself in the head as first responders arrived.
  • 3. Global RegulatoryCooperationwith Jonathan Armstrong In this LEVICK Daily video interview, we discuss global regulatory cooperation with Jonathan Armstrong, a partner at Duane Morris, LLP. Regulators continue to share information and pursue similar targets across sovereign borders, but they are also competing more for the reputational and political benefits that high-profile enforcement actions provide. 05
  • 4. InfographicsAre theNew Soundbites:A Look at Hydraulic FracturingKen LopezFounder & CEO, A2L ConsultingT The courtroom is a forum where With information flowing faster than ever issue advocacy is enhanced by before and with timelines for decisions persuasive litigation graphics. How- involving billions or even trillions of dollars ever, other settings exist where at- shrinking (e.g. the recent Congressionaltorneys, consultants, politicians, lobbyists and fiscal cliff debate), we believe the need foradvocacy organizations must persuade skepti- quickly produced lobbying presentations iscal audiences. expanding quickly.This article focuses on the creation of advo- By way of example, we tackle the hot-buttoncacy graphics for a particular issue: hydraulic issue of fracking to show how issue advocacyfracturing, better known as fracking. Advocacy presentations may be used when many scien-or lobbying graphics are especially valuable as tific issues remain to be answered and no clearthe material may be used to educate a poten- national consensus yet exists.tial jury pool, to persuade and inform govern- Fracking is the modern evolution of a 60-yearment officials and to support settlement nego- old production stimulation technique that in-tiations. These advocacy presentations may be volves injecting fluid at very high pressure intodistributed via PowerPoint, YouTube or even a well. This technique is widely used to extractdelivered in person from an iPad®. 07
  • 5. Weekly ...information conveyance requirements have the common theme that there is a skeptical audience who needs to learn and understand enough about an issue to see that the presenter’s position is correct. water from the tools and substances used in reserves that can be tapped by fracking will the fracking process. Whereas groundwater last decades or centuries longer than the na- is typically found within hundreds of feet of tion’s domestic oil reserves, thus contributing the surface, fracking occurs miles beneath the to the drive toward energy independence. Such surface of the earth. advocacy pieces are typical of the work we cre- ate. Most often our work is used in litigation or Our advocacy presentation goes on to respond arbitration. However, we also create print and to challenges regarding the nature of the frack- animated presentations for lobbying organi- ing fluid. We aid in dispelling those concerns zations around legislative and policy advo- by using a pie chart to illustrate the point that cacy work or even as part of early settlement roughly 99 percent of the fluid is merely water natural gas from shale, a form of rock that is that energy companies are seeking to recover negotiations. From our perspective, all of these and sand, while the remaining amount is found all over the United States in large quan- this trapped natural gas. information conveyance requirements have composed of chemicals that have familiar and tities. The process produces tiny fissures in the the common theme that there is a skeptical While we do not take any position in the reassuring uses—such as soaps, deodorants rock, freeing natural gas for recovery. audience who needs to learn and understand heated debate over fracking, we have prepared and household plastics. The advocacy mes- enough about an issue to see that the present- Natural gas companies insist that fracking is this narrated presentation (note: it already has sage is that the environmental concerns about er’s position is correct. safe for people and the environment. They also more than eighty-thousand views on YouTube) fracking are overstated. believe it can produce enough energy, from that theoretically could be used to defend More often than not, seeing is believing in our A two part summary chart is then used to high- purely domestic sources, to last for decades or fracking against its opponents in a courtroom business. Comments from all sides encouraged light the benefits of fracking in terms of energy perhaps centuries. setting or used as a widely distributed issue and welcomed. L independence, environmental advantages, and advocacy presentation. For related articles and information, consider downloading Indeed, a study released in July 2011 concludes underscores the benefits of fracking, proving our free 130-page book on Environmental Litigation. that a large field of rock on the New York- Our fracking presentation first shows, in sche- the benefits far outweigh the minimal risks. Pennsylvania border known as the Marcellus matic form, how far below the earth’s surface For tips on winning more cases, subscribe free to The Litiga- Finally, a bar graph that uses schematic tion Consulting Report. Shale can safely supply 25 percent of the Na- fracking occurs and the industry’s routine use drawings of gas reservoirs and a barrel of oil tion’s natural gas needs. Thus, it is no surprise of cement and steel casings to protect ground demonstrate that the domestic natural gas08 09
  • 6. Weekly his claim that he filed it to prevent a similar George Jepsen provided an ideal response attack in the future. When one considers all template when he defined Mr. Pinsky’s case as that Sandy Hook Principal Dawn Hochsprung misguided and clearly stated that a legislative and other heroic teachers and administrators response would be far more appropriate than did to strengthen security at the school prior legal action. to the attack, it’s clear that Mr. Pinsky’s allega- Clearly, Mr. Jepsen was prepared for the even- tions are unfair and unfounded. At the same tuality that a plaintiffs’ attorney might attempt time, it’s hard to see Mr. Pinsky as financially- to win media coverage from the tragedy. That motivated, given the high probability that his enabled to him to articulate a rapid, measured case would be thrown out long before ever it response that achieved the dual goals of deny- reached settlement or trial. ing culpability and remaining sensitive to the No, this threatened lawsuit was about public- emotionally-charged atmosphere. Juxtaposed ity, plain and simple. In that regard, Mr. Pinsky with Mr. Pinsky, Mr. Jepsen seemed calm, col- got exactly what he wanted from CNN and lected, in control, and—above all—in the right. other national news outlets that put him front It’s a sad reality that all leaders of organiza- and center in recent news cycles. tions can find themselves in the same uncom- Ron Frank / Shutterstock.com Many plaintiffs’ attorneys seek to leverage the fortable position of being targeted by oppor- promotional and marketing opportunities that tunistic plaintiffs’ attorneys with no real case. accompany major events just as aggressively as But with sound planning, careful preparation The Newtown Tragedy they pursue the big awards that can come with courtroom victories. To highlight just one ex- ample, we need look no further than the Gloria and timely delivery of credible messages, they should all feel confident that they can make their critics look just as silly as Mr. Pinsky & Camera-Chasing at its Worst Alreds of the world to see just how valuable it is for plaintiffs’ attorneys to keep themselves in looks today. L Gene Grabowski is an Executive Vice President at LEVICK front of the cameras as often as possible. and a contributing author to LEVICK Daily. Gene Grabowski The problem for companies, government agen- Originally Published on LEVICK Daily cies, hospitals, schools and other institutions is that these plaintiffs’ attorneys cannot win To be fair, most plaintiffs’ attorneys would an increasingly essential element of every plain- publicity for themselves without first win- never dream of capitalizing on a tragedy like tiffs’ attorney’s practice. Few of them chase am- ning publicity for their cases. Too often that the Sandy Hook massacre for publicity or finan- bulances anymore; but nearly all of them chase means dragging defendants’ otherwise good cial gain. But while Irving Pinsky’s $100 million the cameras when one seems nearby. names through the mud in as many venues lawsuit against the state of Connecticut does not The fact that Mr. Pinsky quickly withdrew his as possible. For those organizations caught in aptly represent the profession, it does highlight misguided lawsuit does little to substantiate the crosshairs, Connecticut Attorney General10 11
  • 7. Weekly If I were advising Netflix, I would tell the com- pany to tell the SEC to bring it on,” says Neil Eggleston, a partner at Kirkland & Ellis LLP who has defended a number of high-profile compa- nies and individuals entangled in regulatory enforcement matters. “It seems to me that this is a misguided attempt at regulation through enforcement that is entirely divorced from the origins of Reg FD. The rule was put in place to prevent selective disclosure of material informa- tion to certain analysts, thereby providing them an unfair market advantage. Moreover, Reg FD only requires that material information be publi- cally disseminated; it does not mandate how that information should be publically disseminated. “Thus, to say that a Facebook post to 245,000 fol- lowers breaks with Reg FD is a stretch. This is not a case of targeted dissemination—and if Netflix makes that case in court, I think it will win.” Why Netflix Shouldn’t Back Down mission’s Luddite views if their case against Netflix ever goes to trial. Mr. Eggleston’s insights hit the nail on the head Wells Letters Can’t Compete with Little Red Envelopes Earlier this month, Netflix received a dreaded in an age when social media have fundamen- Wells Notice over the alleged posting of ma- tally changed how public companies com- terial information to CEO Reed Hastings’ municate with the marketplace. Does anyone Richard S. Levick, Esq. public Facebook page in July 2012. The SEC believe that Netflix’s 10-Q or 8-K filings are as Originally Published on Fastcompany.com enforcement staff believes that Mr. Hastings widely read as Mr. Hastings’ Facebook page? broke with Reg FD when he posted a 43-word Does a traditional news release (the SEC’s pre- U message about the one billion hours of video ferred communications channel) have the viral nder Chairman Mary Schapiro, continue the Commission’s transition into the subscribers accessed in June of 2012. Already, allure of a tweet of a popular CEO? the U.S. Securities and Exchange 21st Century unabated. a number of pundits—the Wall Street Journal’s Commission (SEC) has done a The answer to both questions is a resounding But when it comes to social media, Regulation Holman Jenkins, in particular—have ques- Herculean job of moving from no. And, as such, the SEC’s case against Mr. FD, and what constitutes a “public” disclo- tioned the wisdom of the enforcement staff’s what was becoming an increasingly irrelevant Hastings and Netflix represents a tremendous sure, it’s hard to see the SEC as anything but a decision to classify Hastings’ social media and antiquated government agency to one that opportunity to finally open the flood gates for typewriter-driven bureaucracy. There’s a very activity as anything but public. Those pundits is again an essential element of our body capi- the entire sphere of public companies seeking good chance that the courts will scold the Com- aren’t alone. tal. All indications are that Elisse Walter will new ways to hasten the speed and expand the12 13
  • 8. Weekly reach of their key financial messages. After all, to be widely credited should the company be one could easily argue that Mr. Hastings stands able to keep the corporate raider at bay. for full and fair disclosure while the SEC de- Another important point to note—and one that mands allegiance to the telegraph in the age of lends this drama a certain sense of irony—is the Internet. that IR engagement via social media falls Whether intentional or not, Mr. Hastings’ directly in line with what the SEC is trying Facebook post made a compelling statement to accomplish in the Dodd-Frank era. As Mr. about social media’s utility in the IR realm for Hastings’ amply demonstrated, it has the reach the simple reason that it had a dramatic impact. to inform the widest possible swaths of the His page has more than 246,000 subscribers investing public. It has the speed to ensure that “ Another important point to note...is that IR engagement via social media falls directly in line with what the SEC is trying to accomplish in the Dodd-Frank era.” Even if the unlikely outcome comes to pass and fell swoop, public companies ought not to be who facilitated a viral effect when he shared information reaches the marketplace in a time- Netflix is ultimately found to have stepped out- turned off to the myriad benefits of social me- the record-breaking video view stats. They were ly fashion. Perhaps most important, it provides side regulatory boundaries, Mr. Hastings has dia engagement in the IR context. Not even the rapidly disseminated amongst subscribers’ for two-way communications between share- provided us all with a salient reminder that it SEC can put the toothpaste back into the tube, social networks, bloggers, analysts, and even holders and the companies they own. If there really is fine for a public company to discuss turn back the clock, and deny that social media traditional journalists. The result was a jump are other media that can inform and empower material information on social media sites as are here to stay. in stock price from under $70 a share to more investors with such effect, they aren’t yet on long as the company avails itself of traditional If the Commission ends up making its case in than $80—with the post being the only data my radar screen. disclosure options simultaneously. As such, the court, it will likely learn that lesson the hard point available for explaining the increase. answer moving forward is for public compa- For all of these reasons, it’s hard to conclude way. Either way, it’s probably a good time for nies to feel perfectly confident sharing mate- As of this writing, the stock is trading around that Mr. Hastings’ Facebook post is anything the SEC to sell its typewriters. L rial information on blogs, Facebook, Twitter, or $89 a share, even with the SEC investigation other than what the framers of Reg FD envi- Richard S. Levick, Esq., President and CEO of LEVICK, even YouTube—as long as the information has somewhat dimming investors’ excitement. With sioned. At the same time, however, it is perfect- represents countries and companies in the highest-stakes gone out via a news release, 8-K, or 10-Q first Carl Ichan circling overhead (he now holds a 10 ly understandable that most public companies global communications matters—from the Wall Street or at the same time. crisis and the Gulf oil spill to Guantanamo Bay and the percent stake in the company), the lasting spike will want to see how this case plays out before Catholic Church. created by Mr. Hastings’ very public post ought jumping headfirst into the social media waters. Despite the SEC’s misguided attempt to reign in The good news here is that they don’t have to. Netflix, speech, and the Internet in one14 15
  • 9. The SEC Gets ItsGroove BackRichard S. Levick, Esq.Originally Published on Forbes.com
  • 10. Weekly It won’t likely come as big news to dangers of High Frequency Trading and under- Elisse Walter, the new interim head regulated Money Market Mutual Funds. Even of the vv (SEC) who is replacing now, as critics begrudgingly admit that Schap- Mary Schapiro, that the securities iro tightened the rules on those funds in 2010, industry will be significantly transformed in they complain that the impact of the reform has 2013. For Walter, it’s going to be a continuing been eroded by industry lobbyists. The perni- baptism by fire. cious influence of money and power in Wash- ington, DC? Blame that on Schapiro too. The transformation will be more decisive, per- haps, than anything we’ve seen during the last Frankly, it’s all a little like criticizing Roosevelt four turbulent years, in large part because of because he did not end the Great Depression in the Dodd-Frank rule-making and implementa- his first term nor achieve real prosperity until tion that now confront the SEC. As Christopher the war boom. In the same way, the jaundiced Garcia observes, there are an “obscene” num- assessment of Schapiro lacks historical per- ber of rules yet to be proposed, finalized, and spective. Interestingly, it’s the lawyers working implemented—hundreds of them, with many closely with the SEC in recent years who have having potentially significant implications for apparently maintained the more enlightened the banks. The Volcker Rule is only the most perspective and done Schapiro the most jus- obvious example, adds Garcia, a partner at tice—on and off the record—in their comments Weil, Gotshal & Manges, LLP. on her star performance. No doubt this looming sea change, along with In fact, she probably saved the SEC or, at least the high drama of the post-2008 era, prompted as Garcia says, “steered it through its most dan- a more focused evaluation of Schapiro than gerous period.” One lawyer reminds us that typically greeted her predecessors upon their the full-impact of the SEC’s whistleblower departures. Indeed, there has been a penchant program won’t be felt until 2013, and that the among the pundits to focus on the shortcomings success of those dramatic incentives will then of Schapiro’s tenure; on the Commission’s failure be proven. Yet that’s only one initiative. In to address and solve the systemic problems that 2011, the Commission set a new agency record were exacerbated by the economic crisis. for enforcement actions (735) and collected $2.8 billion in penalties. And, at a time of ob- Much of that criticism could not, in fact, be sessive budgetary constraints, Schapiro played more shortsighted. her political cards to secure ample funding The litany of criticism ranges from policy to from Congress. enforcement. The Commission on Schapiro’s Again, though, 2013 is the year the rubber watch was blamed for failing to address the meets the proverbial road and, to extend our18 19
  • 11. BLOGS worth following Weekly historical metaphor, Walter will play Truman Schapiro for salvaging the SEC from obsoles- to Schapiro’s Roosevelt. The Dodd-Frank rule- cence are likewise keen in their support for Wal- making is the most important challenge but ter. “She makes a lot of sense as a successor as a host of other issues are also decisive. Flash there will not be a lot of getting up to speed nec- Thought leaders Industry blogs crashes will naturally be a hot-button topic. essary, given her experience, not only as a Com- Amber Naslund Holmes Report Also “of particular interest will be how the missioner of the SEC, but also as a senior execu- brasstackthinking.com holmesreport.com SEC deals with the loosening of the historical tive at FINRA and on the SEC staff,” says Thomas Amber Naslund is a coauthor of The Now Revolution. A source of news, knowledge, and career The book discusses the impact of the social web information for public relations professionals. restrictions on general solicitation and adver- McGonigle, chairman of the SEC Enforcement and how businesses need to “adapt to the new era tising under Rule 506 of Regulation D as well as Practice Group at Murphy & McGonigle. of instantaneous business." NACD Blog blog.nacdonline.org the implementation of exemptions for crowd- Brian Halligan The National Association of Corporate Directors Yet the new SEC chairman will need a par- funding,” says Robert Steinberg,” a partner at hubspot.com/company/management/brian-halligan (NACD) blog provides insight on corporate ticularly rare combination of distinct leader- HubSpot CEO and Founder. governanceand leading board practices. Jeffer Mangels Butler & Mitchell LLP. ship skills. First, the job will require tireless Chris Brogan PR Week “From a political perspective,” adds Steinberg, managerial oversight of the many daunting Chrisbrogan.com prweekus.com Chris Brogan is an American author, journalist, PRWeek is a vital part of the PR and communications “the Commission will have to deal with the and multifaceted tasks at hand, especially the industries in the US, providing timely news, reviews, marketing consultant, and frequent speaker about possibility of a 2-2 deadlock between the cur- Dodd-Frank rule-making. As Dennis Kelleher, social media marketing. profiles, techniques, and ground-breaking research. rent Republican and Democratic Commission- President and CEO of Better Markets, advises, David Meerman Scott PR Daily News ers until the Obama administration can name the chairman “must [also] get serious about davidmeermanscott.com prdaily.com David Meerman Scott is an American online PR Daily provides public relations professionals, another to the Commission.” regulating high-frequency trading, payment social media specialists and marketing marketing strategist, and author of several books for order flows, abusive practices, consolidated on marketing, most notably The New Rules of communicators with a daily news feed. That’s not the only political issue brewing. The Marketing and PR with over 250,000 copies in audit trails, and market transparency.” print in more than 25 languages. SEC must grapple with some stiff inter-agency competition as the Consumer Financial Pro- Second, the job will require vision, the kind Guy Kawasaki BUSINESS Related guykawasaki.com FastCompany tection Bureau (CFPB) and the U.S. Commod- of vision that sees beyond the multiple crises Guy Kawasaki is a Silicon Valley venture capitalist, fastcompany.com ity Futures Trading Commission (CFTC) both of the day to a higher purpose; namely, the bestselling author, and Apple Fellow. He was one Fast Company is the world’s leading progressive of the Apple employees originally responsible for business media brand, with a unique editorial expand their Inside-the-Beltway profiles. That enactment of an agenda that tightly regulates marketing the Macintosh in 1984. focus on business, design, and technology. gauntlet has already been thrown down. As a marketplace demonstrably in need of aggres- Jay Baer Forbes one Schapiro detractor wrote, the SEC’s “final- sive regulation—even as it encourages invest- jaybaer.com Forbes.com izing…the Dodd-Frank derivatives provisions ment, growth, and job-creation. Jay Baer is coauthor of, “The Now Revolution: 7 Forbes is a leading source for reliable business Shifts to Make Your Business Faster, Smarter and news and financial information for the Worlds was painfully slow, in stark contrast with the More Social." business leaders. Tall order. It’s our guess that, by December 31, dynamism of the CFTC under Gary Gensler, Mashable 2013, Walter may be in for some of the same Rachel Botsman which had far broader derivatives jurisdiction rachelbotsman.com mashable.com kind of criticism that has faced Schapiro. And Social Media news blog covering cool new websites to deal with.” Rachel Botsman is a social innovator who writes, consults and speaks on the power of collaboration and social networks. it will probably be just as unfair. L and sharing through network technologies. Given all these exigencies, it is painfully obvious Richard S. Levick, Esq., President and CEO of LEVICK, that the choice to replace Schapiro is crucial. Seth Godin represents countries and companies in the highest-stakes sethgodin.typepad.com Here, many of the same lawyers who praise global communications matters—from the Wall Street Seth Godin is an American entrepreneur, author crisis and the Gulf oil spill to Guantanamo Bay and the and public speaker. Godin popularized the topic Catholic Church. of permission marketing.20
  • 12. IN THE NEWS ArticlesPR Week | January 3, 2012DC UnlockedMSN Now | January 3, 2012PR experts agree: The NRA Press Conference was a DisasterHuffington Post | December 24, 2012Wayne LaPierre Speech Was A Total Public Relations Disaster, Say PR ExpertsBernama | December 24, 2012Social Media An Important Tool For Brand Promotion, Says Renowned Forbes CommentatorInternational Buisness Times | December 24, 2012US Economy 2013: If Fiscal Cliff Is Avoided, What About The Debt Ceiling?PR Week | December 21, 2012NRA Facebook and Twitter Blackout: Smart Crisis Comms or Social Media Fail? THE URGENCY OF NOW.